MGM Has a Solid First Quarter

Net revenue across the gargantuan gaming giant for the quarter came in essentially flat at $4.3 billion. However, tough comparables on both the Las Vegas strip and in China saw net income plummet to $149 million vs. $217 million. EBITDA also trended slightly down to $637 million vs. $673.

The companies' Las Vegas Strip resorts make up about half of all revenue. In this case, they were down 3% due to the 2024 Super Bowl being hosted in Las Vegas and, to some extent, the extra day in February last year, according to the company. Still, $2.2 billion was a positive result considering the Strip as a whole was down more than 5% for the quarter. 

Regional operations showed flat revenue at $900 million vs $909 million. However, EBITDA saw a slight 2% bump from payouts related to insurance on business interruption due to the 2023 cyberattack that crippled the company for several days. 

The Chinese segment of the company also showed resilience, with a slight 3% drop for the quarter and net revenue of $1 billion. Interestingly, MGM Digital, which includes the company’s international online gambling ventures, had only a flat revenue number of $128 million and a growing EBITDA loss of $34 million from $19 million last year. The company cited ongoing costs in rolling out its new operations in Brazil.

BetMGM, the joint North American online casino venture between Entain and MGM, however, had a stellar quarter with revenue up 34% and EBITDA of $22 million. The company has legal iGaming in New Jersey, Michigan, Pennsylvania, and West Virginia. That market grew by 27% year over year, but even that number was eclipsed by the online sports betting market, which grew by 68%. MGM also reaffirmed guidance on the division at around 2.5 billion in net revenue for the full year of 2025. 

The company spent almost $500 million in the first quarter buying back shares at what it said was an attractive valuation. It announced plans to spend an additional $2 billion more in the coming quarters on stock repurchases. They reinstated their belief that if you make the adjustments for separating out China and adding back in BetMGM to 12-month trailing EBITDA, the stock price only reflects a value of 3x to 4x earnings.

They also announced that the company has enrolled 50 million people into its MGM rewards program, giving MGM one of the largest player databases in the world. Even more impressive is that this number has grown by 50% since 2020. Much of that, of course, comes from BetMGM expanding its sports offerings into more than 30 states and Provinces. 

MGM also recently broke ground on its long-awaited casino project in Osaka, Japan, which is slated to open in 2030. While the company will partner with Orix and several smaller Japanese partners in the undertaking, the projected cost is almost $9 billion, which will require a significant capital outlay over the next 20 quarters or so.

The company is also considered one of the front runners for what most believe will be three downstate licenses in New York State centered around metro New York. If chosen, the company would spend another $ 2 billion at its slot-only business in Yonkers on expanding and updating the property over the next several years. Decisions are expected on the project winners around the end of the year. 

The company hasn’t completely given up hope of getting a casino in its Jumeirah Beach project, which will open in Dubai in late 2027. This MGM project, in partnership with Wasl Hospitality, combines the ARIA, Bellagio, and MGM hotel brands in one large development named the Island. However, the Island currently lacks a gaming license. 

MGM CEO Bill Hronbuckle addressed that concern during the earnings call, saying that top-level representatives had recently returned to the UAE, laying out the case for an opulent casino as part of the $3 billion beachfront development. But the final say was in the hands of the rulers in the Emirates, and they were waiting to hear back. 

MGM seems well-positioned to continue to grow its business in both Las Vegas and its regional market at a moderate pace. Its international  MGM Digital arm continues to ramp up but will likely see profitability before the end of the year. Their share of the BetMGM profits will grow by double digits in the foreseeable future, and possibly much more should more states, including potentially New York,  legalize iGaming casinos and not just online sports betting.

If you factor in a likely license for their Yonkers casino facility, the still somewhat distant $2 to $3 billion a year in revenues the Osaka casino should generate, and the potential of a nod from the UAE government, the future looks very bright indeed.